purchase financing tips
- Obtain loan
approval before making your offer
- Have your down payment available before making your offer
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purchase financing tips |
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| Buying and financing a new home can be both exciting and stressful. In order to maximize your chances of success and thus minimize your stress, here are some tips to consider before you make your offer: | ||
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Obtain written loan approval before making offers If you are planning on buying a home in the next 90 days, obtain written loan approval before you make any offers. Given the strong housing market, desirable, well-priced properties often receive multiple offers. If your offer is accompanied by a formal loan approval, a pre-approved loan could make the difference between your offer and another and a lower purchase price. You would also be in a position to close escrow as well in as little as 15 days, which may enable you to lock in improved loan terms. We can issue a loan approval within a few days of having some preliminary information. (click here for loan approval check list and on-line loan application). |
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Down payment The appropriate amount of down payment is a personal issue. On one extreme, some borrowers put as little as 3% of the purchase price as down payment. While this strategy maximizes tax deductibility of mortgage interest and investment leverage, it also maximizes risk of credit damage or foreclosure. A layoff from work, rising rates or any other unexpected set back could result in financial jeopardy. On the other extreme, some highly risk averse people, pay 100% cash! The important point is for you to be comfortable. We encourage you to review various scenarios with different down payments and payment options to see if these fit within your budget and comfort level. Do not forget to leave some room for unforeseen circumstances. Click here to see how large of a loan you can qualify for. |
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Have your funds available
To avoid any problems with loan approval, funds should be
in your account(s) for at least 90 days prior to applying for a loan. Acceptable funds can be marketable securities and CDs as well as cash. Gifted funds from a family member do not need to meet this 90 day requirement provided there is a signed gift letter and an account statement from the
giftor. |
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Have at least 3 months reserves after you close
Lenders require at least 3 months of payments + property taxes + hazard insurance available at the close of escrow. These reserves offset the risk of unforeseen circumstances such as a job layoff. Some loans require up to 6 months reserves, so make sure to
ask when you apply. |
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